Solvency II changes in technical provisions,

Transcript:Solvency II changes in technical provisions,:
Solvency II changes in technical provisions, including contract boundaries Luca Bianchi May 4, 2023 1 Introduction EIOPA delivered on 21st April 2022 two guidelines on technical provisions, where the 2nd is focused on contract boundaries, that is the treatment of future premiums and some future options for the point in time technical provisions (pillar 1, reporting). Why guidelines? That solution was deemed appropriate in phase of beginning study of “solvency II 2020 review” where some issues were driven to be dealt within guidelines rather than via amendments of regulation. For this reason, the list of topics in scope of those guidelines is not exhaustive: other can be treated through changes of regulation. 2 Introduction Final report were delivered on 6th July 2022 Followed by: - Consolidated version with explanatory text on 10th March 2023 - Revised guidelines on the end of January 2023 IVASS issued on 20th December 2022 document 10/2022 which lists the proposals of amendments of the current local regulation in force IVASS 18, aimed to endorse the changes of the 2 EIOPA guidelines 3 Divergent practices for technical provisions The need to issue amendments to the existing guidelines has been the observation of divergent practices on the way to calculate technical provisions across Europe during the past years Therefore, guidelines have been amended with regard to: The role of future management actions Modelling future expenses Valuation of options and guarantees through Economic Scenario Generators Modelling dynamic policyholder behaviour Identification of EPIFP The new guidelines apply in the same manner to both individual and group balance sheets. Guidelines shall be explicitly accepted by national competent authorities (NCA). If not, EIOPA would inform the EU Parliament, Council and Commission. Guidelines are subject to potential future changes by EIOPA. 4 Stakeholders feedback and application date The drafted proposals delivered in April ‘22 were put under discussion to stakeholders which were identified split down in 3 classes: EU trade, insurance or actuarial associations National insurance or actuarial associations Other parties such as consultants, lawyers or insurance and reinsurance undertakings EIOPA was aware of the importance of first application of IFRS17, considering the scheduled entry in force that is 1st January 2023: it gives to the Local National Competent Authorities (NCAs) the power the delay the 1st application of guidelines 5 Part 1: technical provisions New: 25, 28A, 37A, 37B, 37C, 40A, 0, 24A, 24B, 24C, 24D, 24E, 40B, 53A, 57A, 77A